Call/WhatsApp/Text: +44 20 3289 5183

Question: 1. For each of the following pairs of goods, which good would you expect to have more elastic demand and why? a. Required textbooks or mystery novels. b. Tim McGraw music or country music recordings in general.

10 Oct 2022,1:48 AM

 

1. For each of the following pairs of goods, which good would you expect to have more elastic demand and why?
a. Required textbooks or mystery novels.
b. Tim McGraw music or country music recordings in general.
c. electricity during the next six months or electricity during the next five years.
d. Coke or soda in general.


2. Kahuna Burgers - Jim and Jane have opened a new restaurant in town, JJ’s Burgers. Their burgers are quite popular, especially the Big Kahuna burger, which was written about in the local weekly newspaper and mentioned by a local entertainment blogger online. Jim tells Jane that since the burger is so popular, they should raise the price to make more money.
a. Given what you know about price elasticity of demand, is Jim correct that a price increase would bring in more money?
b. The Big Kahuna burger sells for $10.00 and 200 are sold each week. What is JJ’s total revenue from Big Kahuna burgers?
c. Jim suggests a 10 percent price increase for the Big Kahuna burger, raising the price to $11.00. After the price change, JJ’s sells 160 Big Kahuna burgers a week. What is the percentage change in the quantity demanded after the price change?
d. What is the price elasticity of demand for JJ’s Big Kahuna? Use the price elasticity formula to determine if the price elasticity is elastic or inelastic.
e. What is JJ’s total revenue after the price increase? Using the total revenue approach, is the price elasticity of demand for JJ’s Burgers elastic or inelastic? How do you know?


3. Peanut Butter and Jelly - Consider the case of a consumer that buys peanut butter in six-packs. Use the information that follows to calculate the appropriate elasticities of demand.
a. When the price of a six-pack increased from $18 to $22, the number of six-packs bought decreased from 30 to 20. What is the consumer's price elasticity of demand in this case? How did the consumer's total spending on peanut butter change as a result of this? (Spending by the consumer equals total revenue to firms selling peanut butter.)

b. When the price of jelly decreased from $4 to $2, the number of packs bought went from 20 to 28. What is the consumer's cross-price elasticity of demand for these two products? What does the calculated elasticity imply about the relationship between peanut butter and jelly for this consumer?

c. When the consumer's income decreased from $64,000 to $56,000, purchases of peanut butter six-packs increased from 28 to 36. What is the income elasticity of demand in this case? Based on this calculated elasticity, what type of good is peanut butter as far as this consumer is concerned?

d. When the price of mayonnaise increased from $2.75 to $3.25, the consumer increased consumption from 36 six-packs to 44. What is the cross-price elasticity of demand for these two products? What does the calculated elasticity imply about the relationship between peanut butter and mayonnaise for this consumer?

e. When the price of a jar of jelly decreased from $4 to $2, suppliers of jelly decreased production from 250,000 jars to 150,000 jars. What is the price elasticity of supply for jelly? Give an interpretation of the calculated elasticity.

 

4. Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston.
Price Qd – Business Travel Qd – Vacation Travel
$150 2,100 1,000
$200 2,000 800
$250 1,900 600
$300 1,800 400

a. As the price of tickets rises from $200 to $250, what is the price elasticity of demand for: SHOW YOUR WORK
i. Business travel
ii. Vacationers
b. Why might vacationers have different elasticity than business

 

Expert answer

 

1. For each of the following pairs of goods, which good would you expect to have more elastic demand and why?
a. Required textbooks or mystery novels.

I would expect a required textbook to have more elastic demand than a mystery novel because, while people may want to read mystery novels, they may need textbooks for school or work.


b. Tim McGraw music or country music recordings in general.

 

I would expect Tim McGraw music to have more elastic demand than country music recordings in general because, while people may want to listen to country music, they may specifically want to listen to Tim McGraw music.


c. electricity during the next six months or electricity during the next five years.

People are more likely to need electricity during the next five years than during the next six months. This is because people may need electricity for basic needs such as cooking, cleaning, and staying warm, whereas they may only need it for special occasions during the next six months.


d. Coke or soda in general.

Coke would have more elastic demand because it is a brand that people are willing to pay more for. It is not just a generic soda that people can get anywhere.

Stuck Looking For A Model Original Answer To This Or Any Other
Question?

Related Questions

A 32-year-old female presents to the ED with a chief complaint of fever, chills, nausea, vomiting, and vaginal discharge

Scenario 1: A 32-year-old female presents to the ED with a chief complaint of fever, chills, nausea, vomiting, and vaginal discharge. She states these symptoms started about 3 days ago, but she thought she had the flu. She has begun to have LLQ pain and notes bilateral lower back pain. She denies dysuria, foul-smelling urine, or frequency. States she is married and has sexual intercourse with her husband. PMH negative. Labs: CBC-WBC 18, Hgb 16, Hct 44, Plat 325, ­ Neuts & Lymphs, sed rate 46 mm/hr., C-reactive protein 67 mg/L CMP wnl Vital signs T 103.2 F Pulse 120 Resp 22 and PaO2 99% on room air. Cardio-respiratory exam ...
You work in the Department of Foreign Affairs and Trade of Australia. Your department will.....

Problem Description: You work in the Department of Foreign Affairs and Trade of Australia. Your department will be hosting a workshop on the Global Value Chains, challenges, and opportunities for Australia, with participants from academia, industry, government, and non-profit organizations. To prepare for this workshop, you plan to first write a report on GVCs by giving a relevant example. To appeal to the audience, you wish to focus on a GVC in which Australia participates, that is, Australian inputs are used to produce (deliver) final products (services). Your report should: Give an example of GVC which involves at least three ...
Critically examine the memorialisation or commemoration of an event said to be defining of a given society’s collective.......

  Select a relevant piece of artwork (i.e. documentary, exhibition, film) and/or artist and critically assess the artist’s/artwork’s contribution to understandings of how societies remember.   OR   Critically examine the memorialisation or commemoration of an event said to be defining of a given society’s collective or social memory, in which digital technologies/media/archives are seen as highly significant in the formation of remembrance.     DRAFT / STUDY TIPS: The Role of Digital Technologies in the Memorialization of Collective Memory: A Critical Examination Introduction Memorialization and commemoration are crucial aspects ...
You hold the HR directorship of a local company in Durham, which employs 100 workers

You hold the HR directorship of a local company in Durham, which employs 100 workers (all in a managerial position). The company usually offered an incremental pay rise of 3 per cent every year. It also offered some benefits such as health insurance, life insurance, and private pension plan. The cost of living and the high inflation are influencing the organisational revenue. You were asked to rethink the Employee Rewards including the pay rise and the benefit system and to consider withdrawing the private pension plan. Based on that information please answer the following:   1)    What external influences do ...

What Clients Say About Us

Copyright © 2012 - 2024 Apaxresearchers - All Rights Reserved.

WhatsApp us